Efficient & Responsive Supply Chains



Efficient & Responsive Supply ChainsSubmitted by: 6/27/2011Compare and contrast responsive and efficient supply chain needs. Give examples of companies.For a supply chain to be responsive and efficient it is very important to have the factor of controlled risk in it. The term “risk” has been categorized into a number of categories such as systematic, unsystematic, exogenous and endogenous etc. it is very important to study the risks associated with the supply chain because it is said by Christopher and Lee and various other specialists that ‘a supply chain with high risk cannot be efficient”. For a supply chain to be responsive and efficient it is essential for the management to categorize and prioritize the type of risk the organization plans to address and mitigate. This is because of the assumption which is a fact too that organizational resources (time, money and human) are limited, so a careful evaluation of the risks will prioritize them accordingly. As the risk is considered deviation from the standard or desired result, it is important to set the benchmark against which the performance is measured. According to this research paper, a supply chain’s risk framework can be divided into the five components, each of which will be discussed. As the supply chains are becoming amorphous, they’re contributing towards changing strategies and structures related to them. The increasing inter-organizational interdependence, opportunities to compete globally and technological changes are constantly affecting the ever-widening dimensions of the supply chain and can form its context in which it is operating. Therefore, we can say that risk drivers and risk context has to be sorted about the organization to categorize the type of risk organization is dealing with. Some of the supply risk management responses vital for controlling the risk are stated below:Identification of risk driversMeasurement of consequences – Scale of likelihoodAssess alternative responsesPro-active or active acceptance of risksAmelioration/Mitigation of risksAvoidance of risksMonitor and review risksA company-wide understanding of the above will enable the organization to develop a Contingency Approach to risk management. It will contain general risk mitigation approaches to the circumstances of their particular company. Moreover, risk management influencers need to be sorted out too. It will contain the rewards, supply chain risks, timescales and portfolio considerations. Most importantly, supply chain risks contain Nodes Concentric Risk which are the risks primarily focused on the particular node/stage in the supply chain and Chain Diversified Risks which represents a more strategic and holistic perspective and set of decisions. In this way, both operational and strategic level risks will be dealt with. For example, European auto industry currently faces a number of threats from Japanese auto makers. European auto makers need to be really good in managing the risks which are associated with external environment such as political risks, exchange rate risks and also the risks that specific nodes of the supply chain poses such as quality control, waste management and implementing continuous improvement techniques.Another example is of a multinational organization operating in 140 countries and manufacturing and selling high value agricultural equipment. in terms of supply chain configuration manufacturing represents the key influencing node within the network. It is important to pin point the primary level risk drivers which are as follows: External environment, industry specific, partner specific, supply chain configuration, nodes specific, rewards, supply chain risk, timescale and portfolio. Responding to the risk drivers and risk influencers, the company examines a number of alternatives for managing the risks involved. Many of the strategic risks could be identified too. Here, in this case there is special strategic significance of the distribution channel and the dealership structure. The initial development involved developing business plans for each dealership as they’re the source of contact in the foreign country and hold high value. A system of bonus payment to the dealership was linked to the achievement of agreed and planned performance outcomes. These performance targets though not explicitly linked to risk management had the eefct of managing certain risk exposures. Some of the risk management approaches adopted had a number of distinctive features:The UK Company focused attention almost exclusively on the dealership network, recognizing that most of the manageable risks were located in this element of the supply chain.Attention was given to the identification and classification of the risk drivers.A combination of a “carrot” and “stick” approach was used to ensure adherence to performance.Formal and regular performance reporting systems instituted to monitor and control performance. Deviances detected at an early stage assisted in reducing the risk exposure.Underlying emphasis on the need to develop effective relationships built around close collaboration, effective communications, information sharing, and building of trust within relationships.The most far-reaching initiative was the establishment of an agreed set of Performance Standards covering all the dimensions of the dealership operations.In short, as established by the above example and text explained, the identification of risk contexts, risk drivers and developing response management systems are the necessary elements of an efficient and effective supply chain. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download